Cash America earnings down on cost of restructuring Mexico operations
Cash America, a pawn shop and payday lender, on Thursday reported a big drop in earnings but still beat Wall Street's expectations for the third quarter. The company said the profit decline was largely because of one-time expenses related to trimming operations in Mexico. Revenue jumped about 10 percent from a year ago, and the company expects future growth will be fueled by a need for loans. Cash America International Inc. makes money from loans to consumers, from service fees and from selling jewelry, electronics and other goods in its pawn shops.
Net income dropped by two-thirds, falling to $11.7 million from $34.8 million a year ago. On a per-share basis, earnings were 37 cents per share, down from $1.08. The company spent $18.5 million to reorganize its operations in Mexico, where it is closing its jewelry-only pawn shops. It also spent $1.9 million on a failed bid to spin off its online lending business, Enova International. In July it blamed the shelved plans for Enova on volatility in the market for taking companies public.
Without the one-time charges, net income would have been $31.2 million, down about 8 percent. Per-share earnings would have been $1.02, beating the 96 cents expected by analysts, according to FactSet.
Revenue rose 10 percent to $439.7 million, boosted by fees from the online segment both in the U.S. and in foreign markets. Analysts expected $365 million. The company expects fourth quarter earnings of $1.15 to $1.25 per share, compared with $1.18 per share in the same quarter a year ago. In the U.S., Cash America operates under the names "Cash America Pawn," ''SuperPawn," ''Cash America Payday Advance," ''Cashland" and "Mr. Payroll." The company said that regulations of consumer loan products could affect future revenue, but it gave no specifics.
-- The Associated Press